ARK: Active Research Knowledge

NOAH’S ARK; the scriptures in the book of Genesis tells us of a mythical ancient vessel rescuing every living species from a great flood. In the Quran, similarly, Safina Nur in Arabic speaks of this vessel. Maybe today, the financial equivalent is Active Research Knowledge as it confronts 21st-century problems such as global warming and invests in potential solutions.

A fund for the future, given the enormous societal and economic uncertainties, disruptions, and storms ahead. Its funds are currently one of the fastest-growing and performance suggests, one of the most successful investors in recent years.

Six years ago, privately owned ARK managed just over $300 million under management. Today funds under management total $29 billion. Its flagship Innovation Fund is currently valued at $8.6 billion, is up 75% so far in 2020, and has returned an average of 36% over the past five years.

At the helm is Cathie Wood, who at 64 is long experienced in many aspects of finance and investment since graduating in 1981. Subsequently, she has enjoyed years of successful investing with some of the brightest lights within the investment industry.

She is a contrarian investor by nature and has correctly predicted some major investment and economic themes over her long career, not least forecasting peak interest and inflation rates and the subsequent taming and falling inflation under Volker in the 1980s.

In the early 1990s, before anyone was really talking about it, she correctly forecast the unrelenting rise of wireless telecom/cell phone technology and its universal applications and how it was only just the beginning of seismic societal and economic change/upheaval worldwide.

Her mantra remains, “Innovation solves Problems.”

Cathie eschews the traditional recruitment of finance MBAs and banking types to her organization, preferring young students and graduates of molecular biology and computer engineering researching energy storage, robotics, DNA sequencing, and financial/blockchain technologies.

Possibly her most recent [controversial] headlining investment was made in Tesla in May 2019 when its shares were trading around $200, before the recent 5:1 stock split.

In a freely available research note, Wood publicly predicted, and directly contradicted the titan of short selling Jim Chanos, that Tesla would reach $6000 by 2023, and provided her calculations on an excel spreadsheet as to why this was possible. In pre-split terms, her forecast no longer looks quite so fanciful, having recently breached $2000 [pre-split].

While having taken some profits on her Tesla position, she remains positive longer term. Apart from the rapid advancement that Tesla is making in battery [nano] technology, she believes economies of scale will shortly drastically reduce the price of its cars. Of course, she omits to mention the other global carmakers making rapid advances on Tesla's EV lead. Maybe it's the battery technology that is the key to her optimism here?

Among others she has invested in:

  • In 2015 she bought 'Bitcoin' at $250 in its early ascent as a hedge against fiat currencies and possible inflationary turmoil.
  • Cloud-based software company 'Salesforce,'
  • DNA sequencer 'Illumina,'
  • Digital payments processor that's becoming a digital bank, 'Square.'
  • A digital health provider, 'Athenahealth.'
  • A genetic testing innovator that targets reducing health care costs, 'Invitae.'
  • A company operating a system for streaming media, 'Roku.'
  • A 3D printer that lowers costs in designing for a multitude of industries, ‘Proto Lab.’
  • The education software company, '2U.'
  • Real estate platform, 'Zillow.'
  • The proprietary business communications software platform, 'Slack,' after its recent fall.

Cathie Wood passionately believes that an age of enormous disruption is now upon us. While optimistic about many levels of innovation, she worries about the concomitant mass unemployment that is going to result and believes that generally, market indices are heading for a fall. Still, her evangelical belief is that innovative technologies are the golden key to the future.